Solicitors’ letters are often headed “without prejudice”, or “without prejudice save as to costs”. The intention of including these headings is to clarify the basis upon which the document is being sent.
- A document headed “Without Prejudice” is intended to prevent the letter being used in evidence in a subsequent Court hearings and is intended to be without prejudice to the case as claimed, or pleaded.
- A document headed “Without Prejudice Save as to Costs” is intended to be excluded from Court apart from the point when liability for costs is being considered.
The essential purpose of the “without prejudice” rule is to assist with negotiations, however should these negotiations fail to yield a result and the dispute proceeds neither party would be able to rely upon the statements.
In order to qualify for the without prejudice privilege a number of criteria must be satisfied; namely:-
- There must be a genuine dispute. Court proceedings need not be started, however it is important that the parties are either considering or may reasonably be considering litigation.
- There must be a genuine attempt to settle the matter; the rule does not apply if the contents of the letter merely re-iterate the party’s position.
- If the document is challenged, the Court will consider the substance over the form. Correspondingly, whilst a document may be labelled “without prejudice”, this may indicate that the intention was to benefit from the privilege. The Court may view on a proper construction of the document that it does not qualify for this rule. Equally, if a document is clearly intended to be for the purpose of negotiation, even without being correctly headed, the document may qualify for the without prejudice rule.
Exceptions
There are exceptions to the without prejudice rule and there are times when correspondence can be put before the Court. In Oceanbulk Shipping & Trading SA v TMT Asia Ltd and others [2010] UKSC 44, the Court considered some of the exceptions to the rule, namely:-.
- The issue as to whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible.
- Should there be misrepresentation, fraud or undue influence during negotiations, any settlement reached upon this basis is liable to be set aside and the negotiations would no longer remain without prejudice.
- Even if there is no concluded agreement, a clear statement which is made by one party to negotiations and upon which the other party is intended to rely (and that other party does in fact rely upon) may be admissible as allowing a defence of estoppel.
- Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’. The Court has in Forster v Friedland and Fazil- Alizadeh v Nikbin, [1993 CAT 205] warned that the exception should be applied only in the clearest of cases demonstrating an abuse of a the without prejudice rule.
- Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence.
- The exception (or apparent exception) for an offer expressly made 'without prejudice save as to costs' was clearly recognised by the courts in Cutts v Head and Rush v Tompkins due to the fact that there was an express or implied agreement between the parties.
- In the event of there being a dispute over the terms of a settlement agreement; a party to without prejudice negotiations can rely upon anything said in the course of their negotiations in order to evidence that a settlement agreement should be rectified.
In the Oceanbulk shipping case, it was concluded that “when construing a contract between two parties, evidence of facts within their common knowledge is admissible where those facts have a bearing on the meaning that should be given to the words of the contract. This is so even where the knowledge of those facts is conveyed by one party to another in the course of negotiations that are conducted without prejudice”.
The correct use of documents headed “without prejudice” or “without prejudice save as to costs” are a key part of any litigator’s arsenal. Correctly used they will minimise the risk to the client of being able to speak freely whilst these words not affecting their case.
At Benchmark Solicitors LLP we can advise as to the correct use of such terms for the benefit of our clients.
Chris Tuckett – 28th November 2013.